1. Ethics Learning Module Copyright © 2010 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. The Ethics Challenge Corporate officers are now subject to high accountability standards and harsh penalties under the Sarbanes-Oxley Act of 2002 Experts have estimated that U.S. companies lose about $600 billion a year from unethical and criminal behavior LM-2

3. Ethics -Study of moral issues -Concerned with right versus wrong -Many shades of gray LM-3

4. Corporate Social Responsibility Pyramid Source: Carroll, A. B. “Managing Ethically with Global Stakeholders: A present and future challenge, Academy of Management Executive, May 2004, p. 116. Figure A-1 LM-4

5. Corporate Social Responsibility Corporate social responsibility -corporations are expected to go above and beyond following the law and making a profit LM-5

6. A Model of Ethical Behavior in the Workplace Figure A-2 LM-6

7. Internal Organizational Influences Positive relationship between organizational size and unethical behavior Larger firms more likely to behave illegally Managers more likely to behave unethically in decentralized organizations Tendency among middle and lower-level managers to act unethically in the face of perceived pressure for results LM-7

8. Neutralizing/Enhancing Factors Top Management Team (TMT) - consists of the CEO and his or her direct reports. Prior military experience favorably influences the ethical behavior of executives Organizations are encouraged to increase the diversity of its TMT if they want to reduce the chances of unethical decision making LM-8

9. A Decision Tree for Ethical Decisions Figure A-3 LM-9

10. Do Moral Principles Vary by Gender? Males perceived moral problems in terms of a justice perspective -Based on the ideal of reciprocal rights and driven by rules and regulations Women relied on a care perspective -Involves compassion and an ideal of attention and response to need LM-10

11. General Moral Principles There are no absolute ethical answers for decision makers Goal for managers should be to rely on moral principles so decisions are principled, appropriate, and defensible LM-11

12. The Magnificent Seven: General Moral Principles for Managers Table A-1 LM-12

13. How to Improve the Organization’s Ethical Climate Behave ethically yourself Screen potential employees Develop a meaningful code of ethics Provide ethics training LM-13

14. How to Improve the Organization’s Ethical Climate (cont.) Reinforce ethical behavior Create positions, units, and other structural mechanisms to deal with ethics Create a climate in which whistle-blowing becomes unnecessary LM-14